In Today's episode of the Replace Your Income Podcast, hosts Kevin Clayson and Steve Earl engaged in a comprehensive discussion touching upon various aspects of financial literacy, credit management, and amortization. The episode also featured Kevin's exciting purchase of a Tesla Model 3, which served as a practical example for exploring tax advantages and strategies within the context of investments.
The hosts began by emphasizing the importance of financial literacy, shedding light on how a solid understanding of financial principles contributes to making informed decisions. They underscored the significance of comprehending concepts such as credit management and amortization, both of which play crucial roles in financial planning.
The hosts passionately shared their belief that all roads lead to real estate when it comes to building lasting wealth. They elaborated on the numerous benefits and opportunities that real estate investments offer, emphasizing their potential to create passive income and financial security.
Throughout the episode, Kevin and Steve aimed to empower listeners with practical insights and actionable strategies for achieving financial independence. By integrating tangible examples, including Kevin's Tesla purchase, the hosts effectively bridged the gap between theoretical financial concepts and real-world applications.
In summary, the episode encapsulated a holistic approach to financial literacy, credit management, and amortization. Through engaging discussions and relatable examples, Kevin Clayson and Steve Earl provided valuable insights to help listeners navigate their financial journeys and leverage the power of real estate for lasting wealth.
Chapters:
0:00 - New Car
3:50 - Financial Literacy
10:25 - Debt vs Leverage
18:30 - All Roads Lead to Real Estate
19:50 - It's About What You Keep
23:02 - Credit
31:43 - Closing Thoughts
00;00;00;00 - 00;00;17;09
Unknown
We started talking about financial literacy. We talked about the idea. It's not what you make, it's what you keep. And so I want to tie this all together with the purchase of your vehicle this week, your test, your beloved Tesla. Yes.
00;00;17;11 - 00;00;39;28
Unknown
All right. Well, hello, everybody, and welcome to replace your income with Kevin and Steve. How's it going? Kevin Fantastic. How are you? You seem very excited of this. Well, let's go. Look, look, look. Okay, so my truck broke down. You're excited about your truck? Yeah, I'm excited that my truck broke down. I'd been waiting for it to break down, because here's what happens when something older breaks.
00;00;39;28 - 00;01;01;23
Unknown
What do you do? You either fix it. Most people would just fix it. The Well, that that is true. Now, the problem is what if it's like, let's say it's a microwave? Okay, Let's say you have a microwave from like 1982, okay. And it breaks. You fix it. But but then do you really think it's going to last for another 20 years?
00;01;01;25 - 00;01;23;10
Unknown
Probably. Maybe not. So you may just go buy a new microwave, Right. Variable oil pulse. Yeah. So I bought a new microwave. Oh, well, not a microwave, but a but but is it kind of like this scenario? So I don't think my sister in law listens to this, so I can tell the story. Yeah. So, like, her car broke down, but really, it just needed an oil change.
00;01;23;16 - 00;01;44;09
Unknown
So she took it to the dealership to change the oil. Yeah. And she came on with the new car, you said. So that's kind of like this. And it's especially applicable because I so desperately don't want to do car maintenance. Even oil changes that. I got a car that does not require oil changes. Yeah. Yeah. Or gas. Yeah.
00;01;44;10 - 00;02;06;29
Unknown
Oh yeah. Whenever I have to do here's this. It's like Fred Flintstone type carrier. I just pedal my feet right through. It's great. Here's the totality of the maintenance. As I understand it. Tire rotations, which I still want, is somebody else. Well, and washer fluid. So that's about I well, I got a Tesla, I got a model three and I'm very happy with it.
00;02;06;29 - 00;02;31;29
Unknown
And my kids think I'm cool now. It's the first time literally ever the yesterday I my I, my daughter was running late so I just ran her to the bus stop in the Tesla and I pulled up and there's like so many kids getting ready to get on the bus stop. And all of her friends and the kids say, because it's a model three, but it's got some features to it that make it look kind of sporty.
00;02;32;01 - 00;02;51;25
Unknown
And all of her friends were like, thought it was pretty cool, which I know made my daughter feel cool. And that's really all this life is about is just impressing other people. That's it. Nothing else. Yeah, that's you just chase that, really argue with that. You just have to chase the praise of other people and you're set. Yeah.
00;02;51;27 - 00;03;11;27
Unknown
No, it's, it's, it's awesome. Bad. It's really good. I like it. She's, she's Zippy Tesla. She's at the I, I demonstrated the zip with you and Justin yesterday and I don't think I to be doing that very much because as we reach the end of this stretch of the road, I was scared. I did fear for my life.
00;03;12;00 - 00;03;33;21
Unknown
I'm like all this faster than I expected. But yes, so I'm very excited because I've wanted a Tesla for a long time. I just say, and you know what? I started to do so because I was putting some final touches on getting our Halloween decorations put away. And so I have to like disassembled this animatronic. And so I was like, now that I have a Tesla, you know what?
00;03;33;21 - 00;03;58;13
Unknown
I actually listen to the new Walter Isaacson biography of Elon Musk. So I started that, Yeah. Oh, it felt appropriate. It felt that would be very important. I listen to a biography about Elon Musk whilst in my Tesla. Well, you know, speaking of buying new vehicles when you really could have just fixed your vehicle. Yeah. There's this thing that you and I have been talking about lately called financial literacy.
00;03;58;15 - 00;04;19;25
Unknown
And this concept, this bigger picture that in fact, you and I, you know, chatted a little about this just recently, over the last couple of days that, you know, when we were growing up, there wasn't a whole lot of financial literacy going on, not in the schools, not at home, not in any other place. And I don't think I really don't think things have changed too much.
00;04;19;25 - 00;04;45;11
Unknown
Or have they are your kids getting at home. But I mean, so yeah, this, that and you bring up the topic of the podcast. It's not Tesla's it's it's it's financial literacy. It's this idea that you and I have been talking about it. We went to lunch like last week and we were and you brought this topic up and we started to talk about it and we've been just bouncing ideas back and forth and so on this podcast we love to come on and talk about real estate, the things that are happening in the real estate world and what we're seeing and how reviewing the world.
00;04;45;14 - 00;05;12;03
Unknown
And you know, we went through and talked about what's going to be in the book in micro when civilians. But one of the things that we've realized more and more and I had I actually had this experience. Wow, it's weird. I don't mean to connect it to the Tesla again, but as I was talking to the sales guy and the finance guy, just as we were finalizing everything and I was sharing with them a little bit about what we do with real estate, a little of some of the financial principles that we espouse in Live.
00;05;12;10 - 00;05;38;22
Unknown
They were blown away, dude. They were blown away. They're in auto finance. And in this they're adults who make good money like they make good money. And they had not thought of some of these things that I was sharing. And it brings it back to this idea why we wanted the podcast today, that there is a severe lack and this what you just alluded to, to basic financial literacy that is taught in schools, that is taught in the home.
00;05;38;24 - 00;06;00;02
Unknown
And a lot of people don't even understand. I mean, this is literally this was my financial literacy education. Are you ready? I'm going to give it. It's very it's very easy. I didn't receive any until I got to be a senior in high school. And there was a class as a senior in high school. And by the way, this is no knock on my parents.
00;06;00;02 - 00;06;16;28
Unknown
Like they weren't really taught it necessarily either. Right? So it's like you go along. You my mom was really good at balancing the checkbook, like she taught me how to do that, you know? But I didn't really know much beyond that. In fact, I remember when I was in college. So this is after I had my financial literacy course.
00;06;17;04 - 00;06;31;26
Unknown
This will show you how much I knew. I remember being in the quad my first year at college, and there was Visa that was there, and I was like, Oh, you could just sign up and get this free money. Like, I didn't even understand the principle that when I got a card and I charged things on it, that I'd have to pay that back with interest.
00;06;31;26 - 00;06;51;03
Unknown
Like it didn't really settle in my brain because the only financial literacy class I had was senior year and half the year was government, half the year was econ and econ. This is what I remember. This is what it consisted of. There was a brief little mention of supply and demand. But more than anything, Steve, are you ready for what we did?
00;06;51;10 - 00;07;15;02
Unknown
We learned that when you open the newspaper, watch out, everybody. Warning okay, I'm about to drop massive financial knowledge on UK when you open the newspaper, which for some of our millennial listeners, you're not sure what that is. They used to have news and paper. It's weird. That's why it's called newspaper. When you opened the paper when I was a senior in high school.
00;07;15;02 - 00;07;38;20
Unknown
So 1997, there's it would show you stocks stocks of like companies. And then what I learned in the classes, if you pick three stocks and watch them for a couple of weeks and then write a report on if the stocks went up or down, what more need, you know, that's all you need. Yeah, that's a great education. Thank you.
00;07;38;20 - 00;07;58;23
Unknown
I'm really good about it. Yeah, well, you want to know the stocks I picked? I still remember. Oh, yeah? Yeah. Because they are three of my favorite things to this day. Okay. Disney, Pepsi and Nike. That's for the stock. Wow. Those are the stocks that I think. And you then you would have done well if you stuck with them.
00;07;58;23 - 00;08;19;04
Unknown
I would have done and would have done. And when you pick these stocks, how much money did you put into them? Oh, man, we I had so much on the line. I put exactly $0.00 in. But I did have to open the paper and watch if they went up or down. So, no, that's cool. I mean, when you think about it, you know that I know that we make fun of that.
00;08;19;04 - 00;08;36;05
Unknown
And it is kind of funny, but it's also kind of sad because your story is not unique. I know. And, you know, I have my own stories in terms of, you know, when I first got married, a young man I like, I barely knew how to had a budget. Remember getting super frustrated, just trying to figure out our budget.
00;08;36;05 - 00;09;08;08
Unknown
And and and it was is is a really strange experience almost because it was so frustrating. But more importantly than even that was when we moved and we moved into our second apartment and I was paying this money intuitively, I understood that, man, I'm just throwing this money away, you know, to the wind. And I've given it to some landlords, like I either want to be a landlord or I want to own my own house so that, you know, I can, you know, build you know, I can own my own house kind of thing.
00;09;08;08 - 00;09;26;29
Unknown
I didn't even know what equity was. Yeah, I didn't understand any of that. And so I remember just kind of doing these these calculations of different stuff and thinking, man, by the time I graduate from college, it's like I could almost own this property because I thought 100% of your payment just went towards paying off the house. I didn't understand interest, I didn't understand amortization.
00;09;26;29 - 00;09;41;24
Unknown
I certainly didn't understand that I had to qualify for a loan and that you actually had to have some income. Yeah. In order to get a loan. At the time, I didn't even have a credit card like I like I didn't know what credit was. I didn't know what a credit score was. I didn't know any of that stuff.
00;09;41;29 - 00;10;05;10
Unknown
And these are all kind of basic 1 to 1, you know, financial types of things that if we could teach these things to our kids, it's kind of the power of me saying to myself, a man, if I knew then what I know today, well, what would my life look like today? You know, 30, 40 years later after after graduating from high school, mean it's a power.
00;10;05;15 - 00;10;23;26
Unknown
That's the power of what we have to do with our own. So many years since you graduated high school, what was that you want to just run that back with just I don't I can't even like, like talk about financial illiteracy. I can't even add that that large, you know, it's like the number is ten to the power of 15, you know, big.
00;10;23;28 - 00;10;41;16
Unknown
You can't even wrap your mind around it. But but think about our kids today who, like many of our children who go to school and they get these massive loans and everybody's crying and asking the government to forgive. You're talking about student loans. Student loans? Yeah, student loans, exactly. Because they they don't quite even understand what a student loan is.
00;10;41;16 - 00;11;03;03
Unknown
Well, they don't when that when they go to get it going to school so they don't have to pay it and they can spend it on whatever they want. And oftentimes it doesn't go towards actually towards their education and so on. But to pay literally tens of thousands of dollars, sometimes hundreds of thousands of dollars for these education at a university that, by the way, is looking to make money, we forget that, right?
00;11;03;03 - 00;11;30;18
Unknown
Like they I mean, look, they they they could be a nonprofit, but they're still they are it is still a business, right. There are still dollars in and there's dollars out there. Tuition's going to go up. And people I know I have the same experience like I when I was trying to determine which school to go to, I didn't understand why I remember having this distinct thought, which was my parents were trying to help guide me to go to a school that was reasonable and affordable.
00;11;30;18 - 00;11;49;18
Unknown
But I didn't understand because I was like, Well, don't you just get loans to go to school? Like that's I couldn't even wrap my mind around the idea of what a debt would be. And this is why, by the way, I think a lot of Americans have a negative perception of debt, because once they once their mind goes, oh, a debt is a thing that I have to pay back.
00;11;49;18 - 00;12;13;05
Unknown
And with interest, once they wrap their mind around that, it automatically become some sort of a negative thing. It's not all of a sudden it's not leverage, right, because of what they're getting the debt on and how they're managing the debt. And so it's one of those pieces of financial literacy that lacks because we don't teach people not only do we not teach what debt is, we don't teach good debt, bad debt, we don't teach credit scores.
00;12;13;05 - 00;12;31;08
Unknown
We don't teach how you're supposed to have a good credit score, what the necessity is of a good credit score. Let me give you an example of why a good credit score is necessary or helpful. Like a lot of people don't realize that your insurance rates could be drastically improve, which is going to save you real money if you have a good credit score.
00;12;31;15 - 00;12;45;21
Unknown
A lot of people just think if I have a good credit score, I can even go. I can go finance, too. I can go finance a car. I can go finance a house or whatever. It's more than that. When I went and got the test that I was talking to Justin about this this morning, I'm a big fan and you guys can judge me however you want.
00;12;45;21 - 00;13;13;03
Unknown
I'm not Dave Ramsey, so I prefer I use a method that will, I'm sure, tell you about one day where I utilize certain financial instruments in order to pay down debt in a way that allows me to keep the majority of my money for as long as possible. Okay, That's what I do. As opposed to just sticking it in a bank and letting them make money off of me and lend against me, or instead of me just taking all of that money out of an account and throwing it at another company.
00;13;13;03 - 00;13;33;27
Unknown
Because I want to buy something. There's a there's a method, right? And so I like to finance things. And I there's a very specific way that I approach it. So I go to get the Tesla and the they run my credit and I told them what my credit was and they they come back and they go, This is the highest credit we've ever seen.
00;13;33;27 - 00;13;51;09
Unknown
It's it's a used Tesla. It's not a brand new Tesla. They use dealership and they they come back and say, this is the highest credit we've ever seen since we've been here at this dealership. And I was like, okay, cool, awesome. So do you need me to, like, verify my income? Do you need me to do all these, like with credit, like yours?
00;13;51;14 - 00;14;09;00
Unknown
You don't have to do anything. Now, look, I mean, I don't know if that was wise or not, but for me, if I had a low credit score, guess what would have happened? I know what would have happened because I used to be an auto finance. In fact, that's where I started to learn principles of finance. It was not in high school and it was not in college.
00;14;09;00 - 00;14;28;25
Unknown
I still knew nothing. Zero things. Once I got out of college and I started to work in auto finance, I started to understand, Oh, you have to have income, you have to have credit. And if you have income, there's this ratio of how much income you make to how much you are showing on credit in terms of debt.
00;14;29;02 - 00;14;53;13
Unknown
And that creates a ratio. And that ratio has to be in alignment with what the lender determines to be a good credit risk in order to get you, you know, whatever the loan is. I was at Wells Fargo Auto Acceptance, which doesn't even exist, and it was largely subprime lending. Like we were working with people with 500 to 600 credit scores and they had these astronomical terms.
00;14;53;17 - 00;15;19;00
Unknown
But all they were looking at is, oh, they they didn't understand what the interest was that they were going to pay. They didn't understand they didn't understand how interest paid on the loan. They didn't understand the difference between installment debt or revolving debt. They knew none of this stuff. They were just getting loans and getting cars. And the crazy thing was, Steve, I learned just a little bit in the auto finance world what an underwriter is, why an underwriter is important, why a credit score may be important.
00;15;19;07 - 00;15;37;07
Unknown
How to get that. You have to have a healthy mix of credit that there's a debt to income ratio. I didn't know any of that stuff then. Working at Wells Fargo Auto Acceptance, it merged with another company called Wells Fargo Financial. Well, Wells Fargo Financial's primary product was a debt consolidation mortgage. I did not know what a mortgage was.
00;15;37;14 - 00;15;54;23
Unknown
I remember getting the product at Wells Fargo Financial and they're like, Hey, we sell mortgages now. And I literally didn't even know that that's how you buy a house, because I was renting. I never even considered buying a house. I didn't know what that looked like. I had no clue. And so here they are saying, oh, this is how people buy a house.
00;15;54;23 - 00;16;16;22
Unknown
I'm like, okay. And I remember my manager sitting down with me and trying to explain that this is a 30 year loan and I was like, wait, a 30 year loan? And I thought I'd learned installment debt and revolving door. I was like, okay, I don't what credit cards are, I know what installment debt is. But then he started to talk about this thing called an amortization schedule.
00;16;16;22 - 00;16;48;15
Unknown
And I literally that word crippled my brain. I was like, I don't understand. I don't understand what you're saying. I don't understand any of this. I do not get it. And I remember doing loans just learning enough that I could sell it. Right. And they had this cool little tool is really just a spreadsheet that was like, if you consolidate all your credit card debt into this mortgage, but you pay 4% higher than you could otherwise and you pay a 4% upfront fee like you were buying down the rate, like you had a four points that you were buying down the rate and then it was still higher than you could get anywhere else.
00;16;48;23 - 00;17;05;01
Unknown
But you were consolidating debt and they had this cool little fancy spreadsheet software that when I showed it to you, it would look like you'd pay your debt off sooner. Right? And I realize now that the reason why I could sell that, the reason why people bought it, is they didn't understand the principles of how interest was working with various types of debt.
00;17;05;08 - 00;17;21;00
Unknown
They didn't understand what this amortization schedule was. They didn't understand that they were going to be front loaded with massive amounts of interest on a loan that they were likely never going to repay and maybe even going to default on because they were a bad credit risk. But at the time, the lending practices were such that it could take place.
00;17;21;07 - 00;17;59;29
Unknown
This is all stuff that I watched in real time, not knowing a dang thing about finance, because all I had done is pick three stocks in the newspaper and I learned nothing in college and the reason that we're talking about this today is like this whole concept. And if you guys are listening and watching, understand that, Steve And I think we could tell you that while we've been successfully helping people invest in real estate for many years now, we are realizing that there's still only a handful of people that we can serve because not everybody's qualified to go and buy an investment property.
00;18;00;04 - 00;18;21;13
Unknown
Do you know how many millions of people out there need to understand principles, whether that's the micro winning philosophy in the concept, how that could change them personally, how that could change their business, or just basic principles of financial literacy so that they could actually take steps to get ahead as opposed to constantly being behind the eight ball and not knowing how to get out of their own way with their financial life.
00;18;21;13 - 00;18;49;29
Unknown
And Steve, this is why we are going to be really shifting. We'll never get away from real estate. Real estate is the core of everything we do. You have a phrase that I love, which is, you know what phrase I'm talking about, right? So all roads lead to real estate. All roads lead to real estate. And I love that Justin set an article earlier this morning that had another one of those statistics of like 90% of all millionaires in America have relied on real estate is a big chunk of how they got there.
00;18;49;29 - 00;19;12;15
Unknown
Right? All roads lead to real estate, whether that's your primary residence, whether that's your primary residence that you're leveraging to go into investment real estate, all roads lead to real estate. But what we forget is that while all roads lead to real estate, sometimes real estate only happens towards the end of a pretty pronounced period of time on the road.
00;19;12;17 - 00;19;30;13
Unknown
And there's a lot of people that have no idea how to get from here to there. Well, and one one of the important things to remember and I think that you'll like this phrase as well, because you're a sports guy, but sometimes the best offense is a good defense. Yes. And a lot of people get caught up in is like, I just need to make more money.
00;19;30;13 - 00;19;45;18
Unknown
I just need to have more income. I just need to increase my earnings when the reality is they just need to figure out how to keep more of what they earn. Totally. Like that is one of the keys to financial literacy. Mike Chamberlain talks a lot about that. Talk a little bit more about that because you glossed right over that.
00;19;45;18 - 00;20;24;17
Unknown
But that is a super critical piece of real life, actual financial literacy. So say that again. Sometimes the best offense is a good defense, which is it's not about how much you make, it's about how much you keep of what you do make or what you do earn. And in this really boils down to how financially literate you really are in understanding all of the facets of of finances all the way from, you know, some people will pay 500 times more for the same thing as somebody else just because of a certain brand.
00;20;24;22 - 00;20;47;01
Unknown
Right. Right. So you'll pay like maybe actually 10,000 times more if it's a Gucci bag versus the same bag that you can buy at Walmart, which is actually the same bag built in the same manufacturing plant by the same people with just a simply different label, right? Steve The zipper is way better quality, right? Yeah, right. So that's one little thing, right?
00;20;47;04 - 00;21;06;13
Unknown
But then even understanding like the gas that you buy, the fact that, you know, three people have to buy gas, I don't have to do that now. So I think I was just curious or the electricity that you have to charge your vehicle. That's why I do it in the park. Are you going to use a supercharger, which costs a lot more, or are you going to like.
00;21;06;13 - 00;21;33;06
Unknown
Right. So and then all the way down to like, like taxes and understanding, it's like but so for example, if if you fall in the in a particular tax bracket but you just barely cross that line, you would have been better off making $1,000 less. Yes. Right. Because you fall into a different tax bracket. Yep. Or or understanding the different tax strategies in order to lower the amount of tax that you pay.
00;21;33;09 - 00;21;57;16
Unknown
All totally legal. You always want to do everything. You don't want to avoid taxes. You want to pay every penny of tax that you owe your state that you're supposed to pay, but you don't want to pay one more penny than you correct are supposed to that you have to. Right. And so understanding the laws and understanding the different tax strategies can help you keep more of the same dollar that you earn.
00;21;57;16 - 00;22;19;28
Unknown
Right? You don't have to go out and earn more dollars to keep the same number of dollars. If you understand different tax strategies. Right, which is really important when you start talking about real estate. Yes. Because one of the things that we look at very, very closely are is what are the property taxes involved when you buy a particular property and when do those taxes take effect?
00;22;19;28 - 00;22;53;27
Unknown
Because when you buy a property in year one, you might still have certain exemptions, but by year two and you claim that property as an investment property, now you're taxed, property taxes go up and you have to take all of those things into account. Same thing. Would it make sense to spend $3,000 to do a cost segregation study, right, in order to save, you know, $50,000 or buy by paying your tax upfront on certain items as you break down the different areas with the cost segregation study.
00;22;53;29 - 00;23;20;02
Unknown
And so just like things like that allow you to keep more of the same dollar if you just become financially literate. We talked about credit. I mean, there's you could make a real strong argument that there's really good credit restoration or credit repair companies that you may not need to repair your credit, but if you could remove some inquiries and you could bump from this credit bracket up to this credit bracket, all of a sudden your pricing, we see it in mortgages all the time, right?
00;23;20;09 - 00;23;45;29
Unknown
Like depending on what's happening, there's certain points with a FICO credit score where your pricing on a mortgage improves drastically, where you're pricing in insurance improves drastically. And you know, it can vary. Right? There's a time when it was 700 and then there was a time it was 720. I think it's probably still 740 today. I got to ask Dustin, I'm not sure, but there's like these points.
00;23;46;03 - 00;24;04;12
Unknown
So would it make sense to spend a few hundred dollars to get to remove inquiries from your credit report to bump your score just a little to get into that next bracket while at the same time figuring out how to keep more of your money by proving you know, how much income you made based on deductions that you could take to keep you in a tax bracket.
00;24;04;12 - 00;24;18;27
Unknown
That means you don't have to pay as much tax. And if you multiply out that, you could keep that money. This is a big reason why I do utilize financing on stuff like my car, because there's ways that I can use the money that I'm allowed to give. What is one of the things that you did while you're buying that car?
00;24;18;27 - 00;24;39;26
Unknown
You're sitting at the table with the finance guy you made a phone call to somebody to ask him a question. I literally so I would I been considering a Tesla partially because like they they go fast. Right. And then and partially because like, it's cool. But now listen even within that I'm like, do I need a model X?
00;24;39;28 - 00;25;04;26
Unknown
Do I need a model three? Where is the breaking point? Right. I just got a model three. It's like the low end Tesla, but it had some cool things. But you would talk to me, Steve, about some of the tax benefits. In addition, and beyond just the tax credit that you could get if you get a new right because you, you talk to me about leasing versus buying outright and I shared with you some depreciation strategy that you then verified with your accountant.
00;25;04;26 - 00;25;19;19
Unknown
Yeah. So I'm there Look, because there was a the my nephew works at a dealership and they had just got a Tesla in that was a used one and it looked awesome. I was like, this might be perfect color combination, everything that I wanted. So I went to go drive it and I drove it. And of course I fell in love instantly.
00;25;19;21 - 00;25;37;20
Unknown
But then before I bought it, I called Kai, who's our kind of in-house one of our CPAs that works with our clients. And I was like, Kai, he was literally driving home from the golf course right? They were in Vegas and I was he and Tony were. But we got to have him on the podcast. I was like, You guys, I'm at the dealership.
00;25;37;22 - 00;25;54;08
Unknown
I'm thinking about buying it. Here's the price. Did it it it ACCI based on my situation, how do we make this make sense? Is this a good decision now? Kai, being a CPA had actually just bought his own Tesla, but he then broke it down for me. Dude, you could do this, you could depreciate this, We could spread out the depreciation here.
00;25;54;12 - 00;26;11;12
Unknown
You can X, Y, and Z. And I went, awesome. And then I went for it and I bought it. And part of the reason was the tax benefits that I was going to get as a result of buying that over something else. So it was just a piece of having somebody in my life that knew a lot more than me.
00;26;11;13 - 00;26;34;06
Unknown
You are significantly smarter than me, mostly because you're so much older and then I'm just kidding. You're not so much older. You're just really a lot older. But just joking. But the guy who's just straight up smart. And Tony, you were just so much smarter than me. And because I don't know what I don't know, you know. Well, and I wouldn't even say that they're smarter than you, but they are part of your financial literacy team.
00;26;34;06 - 00;26;57;24
Unknown
They have an expertise that I don't possess. Have like Tony comes in, does real estate with us, because we possess a certain expertise. We rely on him for some consulting and for some CPA questions. He and I, because they have an expertise that we know a little bit about, but we're not the experts we have. Mike Chamberlin, who's in-house, who was a financial planner for a long time, who looks at the finance world through a different set of lenses than maybe some of our clients do.
00;26;58;00 - 00;27;31;29
Unknown
And you assembled this team of people that all have specialties because one of the things that we forget about in this country, Econ one, two, one, one of the things that makes this country great or could if we would allow it to, is the idea of specialization that there's going to be specialists. There's a whole chapter in the book where we talk about if you want something done right, don't do it yourself because you can leverage the specialties and expertise of other people so you don't have to go through the process of learning it all on your own, but you have people that can assist you so that now your financial literacy increases exponentially, not
00;27;31;29 - 00;27;50;11
Unknown
just because you read a book, but because you found the people who read a lot more books than you have about one particular subject, and who can then provide some additional expertise to your situation. And that is a big reason why we have the company that we have and why we're putting out some of the stuff that's going to be coming really soon.
00;27;50;13 - 00;28;11;03
Unknown
Yeah. So at the end of the day, financial literacy encompasses a ton of stuff. I know that we I know that during this podcast we really bounced around a lot. Yeah, but when you understand finances from all of the different perspectives, you don't have to be an expert in all of them, but you need to have on speed while your your team, right?
00;28;11;09 - 00;28;32;03
Unknown
The individuals who you can call on to help you with with different things. But you need to be have a base, you know, understanding of of a lot of different things so that, you know, even to ask the right questions. Yeah that's a big one because we know that questions are important, but sometimes if you don't ask the right question, you could get it.
00;28;32;03 - 00;28;53;20
Unknown
So sometimes we don't. You know, my wife makes fun of me because I do say, you don't know what you don't know. She's like, obviously, but I'm like, really, though, that that means something to me because I'm like, I have to acknowledge that I don't know all of the things, but I also have to realize that I don't maybe have to know all the things, but I have to have some baseline of knowledge.
00;28;53;25 - 00;29;10;01
Unknown
What I do have to know the most critical piece of knowledge that I have is that I have people that are really good at things that can help assist me in a variety of ways. I lean on you all the time, Steve, because you are so much smarter than me in a variety of ways. You have more experience in certain things.
00;29;10;01 - 00;29;31;23
Unknown
You lean on me for things that I have expertise in, and we just have, you know, a specialization, which is important. So this is, I think what I hope the message of the podcast is. Number one, we have to understand that we are up against it as Americans, meaning we were not taught basic principles of finance, we were not taught basic principles.
00;29;31;23 - 00;29;48;15
Unknown
Some of you may be, but more likely than not most of you listening. We were not given any sort of formal training in in finance, Even if you're a finance major, that's a little bit different. We're talking about personal finance. We're talking about your ability to grow wealth. Right. There's not a lot of that that exists. Number one.
00;29;48;15 - 00;30;17;16
Unknown
Number two, because not a lot of that exists. We have a lot of people who make a lot of mistakes and rob themselves of significant amounts of of money that they could make, keep and then invest in order to amplify what it is they can accomplish. Right. That's that's kind of so there's a lack of financial literacy. That lack causes us to have a physical, literal, actual real dollar sort of negative impact on our financial lives.
00;30;17;24 - 00;30;44;23
Unknown
And then the next phase out of that is the way you figure it out and become more financially literate and utilize those principles is you get a team of people and experts that know more than you know about specialties that may not be your specialty, and then you leverage that so that you can make more, keep more, invest more, which then grows more, which is why you always hear the phrase, I don't know why this is a negative phrase in America, but it totally is right.
00;30;44;26 - 00;31;12;23
Unknown
How many times have we heard somebody say the rich just keep getting richer? You know why? It's not because they're out there swindling everybody. That's what a lot of people in America think, because we're not taught some of the principles of even self development and personal achievement. We're taught something totally, entirely different. But if you want to know what the rich keep getting richer, it's not because they're taking advantage of everybody.
00;31;12;23 - 00;31;37;03
Unknown
Sure, there's probably a few cases in which that's the deal. Karma usually catches up to those people. The reason the rich get richer is because the rich utilize the tax code, the principles, the literacy that's available to them, the teams in the experts that's available to them so that they can take that which they've created that seed and planted and nourish it so that it can blossom.
00;31;37;09 - 00;31;55;22
Unknown
That's like saying trees only get more tree year over time. Yeah, they do. Well, let me kind of tie this together. You we started out the podcast talking about this, this new Tesla that you got and then we started talking about financial literacy. We talked about the idea of of it's not what you make, it's what you keep.
00;31;55;25 - 00;32;14;03
Unknown
And and so I want to tie this all together with the purchase of your vehicle this week your test, your beloved. Yes. Yes. So I'm going to reveal a couple of things. Number one, I think you paid around $30,000 for it, right? So when you had this conversation with with with K, so you paid, you know, $30,000 for this vehicle.
00;32;14;03 - 00;32;43;13
Unknown
But I will argue that you actually paid closer to 24 for this vehicle. And I know you already know this, but if you fall in the 30% tax bracket and K told you that that you could depreciate about $20,000 of correct that vehicle this year, That means if you fall in a 30% tax bracket, 30,000 times that 20,000 equals 6000, which means you literally will pay $6,000 less on your next tax bill.
00;32;43;14 - 00;33;07;22
Unknown
Yes, those are real dollars. So take the 30,000 minus the 6000. And you actually paid $24,000 for this $30,000 vehicle. Yep. That's the kind of thing that we're talking about. Is that where where where else could you without asking the dealership to sell it for you for less without going to the bank and robbing them of $6,000? Yeah.
00;33;07;24 - 00;33;30;23
Unknown
The rules existed because of your financial literacy. You were able to put together this deal in such a way and take advantage of of existing tax code and your your professional license CPA. That the reality is, is you paid closer to $24,000 for that vehicle and 6000 extra dollars in your pocket. Like what could you do with an extra $6,000?
00;33;30;23 - 00;33;48;19
Unknown
Kev I would I should I buy you a present? I feel like that's sure. I mean, you could use a portion. I think that that would be a really, really good idea. But but there's a lot. I mean, honestly, and to be totally honest with the methods that I use, all that does is it gets me one step closer to my next property purchase, to be totally honest.
00;33;48;19 - 00;34;19;10
Unknown
Well, right. So there's a hundred different ways you can look at it. It's like, Well, that will pay my mortgage for the next four months. That will make my car payment for the next three years, right? So it's like, yeah, I prepaid with that. You know, my my vehicle payment for the next three years. So this is why this conversation is so critical and why we'll be spending a little bit more time in the coming months and years on this broader topic and how it relates to real estate and how we can actually facilitate your ability to buy real estate.
00;34;19;10 - 00;34;48;04
Unknown
Because there's four things that you need to become a real estate investor. Number one, you've got to have the good credit. Number two, you've got to have the resources for the down payment. Number three, you've got to have the the income. And number four, you have to have the desire to do real estate, right? So if you're somebody in, I would say the mindset that allows that desire to function, because if you don't have a proper you could have a desire to do real estate, but you will get in your way so many times if you don't have the proper mindset of what that real estate could do.
00;34;48;09 - 00;35;17;16
Unknown
So I think that desire in that mindset is really you listed it as a last category in a lot of ways. I think that it's one of the most important categories and it's the reason why you'll get out of your own way if you're listening in order to go do it. If you're looking for a down payment, you literally because you're planning to pay a certain amount in taxes or you may even get a tax refund and you could let literally take that $6,000 and put it in some kind of an investment or something that that is part of your next down payment after I buy you a gift.
00;35;17;16 - 00;35;36;16
Unknown
Yes. Right. So you'd probably have like $100 left over if you were really like the friend that I think you are. Yes. Yeah. Yeah. So it's it's powerful. It's just absolutely powerful. It is. So, you guys, we hope that this was at least an interesting discussion. There's so much more. And so we could go so much deeper on so much of this.
00;35;36;16 - 00;35;56;26
Unknown
And I think we probably will start to do that because all of it rounds out and colors in the lines of the of the vibrant picture that could be your financial life. And and so we hope that this was enjoyable. We hope it was an interesting discussion and topic and we had fun talking about it. And I'm going to go have fun and make my Tesla go Zoom.
00;35;57;01 - 00;36;04;20
Unknown
Okay. Have a good one. See you guys.